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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers
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To: Claude Cormier who wrote (63614)2/21/2009 11:20:00 PM
From: John McCarthy  Read Replies (1) of 78408
 
Hi Claude

The sector is getting overbought. Gold can make a new marginal high before the correction.

Santoli in Barrons sort of echoes your sentiment. Today,
page 15.

I am going to be really UNFAIR to him and mis-cast his
rumbings as simply pointing to the gold/oil ratio (25
barrels) and his observation that this ratio has
never held for long over the course of the last
35 years. (1976 I guess)

But where both of you confuse me is at this point:

Note:This (what follows) is all imaginary - but might happen.

Binary Events:

(1) Suppose China releases news tomorrow that they will
not buy anymore USA debt. Can't happen:They'd be killing
off their own USA foreign reserves and bond holdings.
But just suppose ....

and/or

(2) Citi can't sell its pieces and the USA government
punts and takes over the banks (I can't spell nationalize)
wiping out equity holders (and because this is my post)
bond holders - also - for good measure.

Now my point is - I don't think people all over
the world would look at (a) technical charts or (b)
gold/oil ratios or any historical thingie-things.

They would just run - but I am not sure where.

But I do think the current owners of gold would
(a) hold onto what they own - and (b) perhaps
double down.

Here is my question:

When people see a technical correction on the
horizon - are they implicitly holding all other
variables as constant.

I am just curious.

regards
John McCarthy
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